SHANGHAI, April 28 (Reuters) - Chinese shares fell early on
Tuesday led by a tumble in small-cap stocks, but banks surged
amid speculation that China's central bank is considering buying
commercial bank assets.

The People's Bank of China (PBOC) could offer more funds for
state banks to buy local government bonds, some analysts
suggested, a move that would be targeted more at alleviating
government debt concerns than a change in monetary policy.

Officials from the central bank did not immediately respond
to Reuters' request for comment.

The rumour helped fuel a sharp rally in banking shares
.

"Many policies had been deemed quite unlikely before, but
they eventually materialised. Investors are betting that if such
a policy becomes true, banks' asset quality would be greatly
improved," Chen Zhizhong, analyst at China Merchants Securities
(HK) Co Ltd said.
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